Estate agents have painted a rosier picture for the residential property market in 2011, but warned that prices were being held down by bank's strict lending requirements

"I do think that this (the housing market) will be constrained below 10 percent unless the banks become quite a lot more lenient – which is going to take time because household debt levels are still high and they are still dealing with quite a large number of distressed sales and properties in possession," he said.

Everitt said the property market had "excellent opportunities" for investors who could afford to buy additional properties, with the best "buys" being properties in popular coastal locations.

Jan Davel, the managing director of the RealNet estate agency group, said the residential property market had several factors in its favour for 2011, including exceptionally low interest rates, slower than expected consumer price inflation and decreasing levels of household debt.

Low interest rates were helping the property market by putting extra money into "household piggybanks" and boosting the demand for credit such as home loans, he said.

"Over the past few months this has already been evident in an increase in home sales activity that will no doubt continue if there is another rate cut early in the year, which many economists are predicting," Davel said.

Property professionals and consumers however, all still had to be cautious and patient.

"We are not going to see another boom period like 2003 to 2006 anytime soon," he said.

"The market is going to take some time to recover, and we don’t foresee a major upswing in 2011 or even 2012."

Lew Geffen, chairman of Sotheby’s International Realty in SA, said he was "bullish" about the prospects in 2011 for the market sector in which his company operates, where the average sale price is around R2.5 million.

"In 2010 we saw volumes increase in this sector by 30 percent and prices move up by around eight percent with the third quarter being particularly encouraging, and we expect this positive trend to continue in 2011.

"The market has really bottomed out now, lending has loosened up somewhat and pent-up demand among those looking to upgrade is starting to come through."

Geffen said buyers coming into the market were "real quality".

"We are seeing a bond application refusal rate of just four percent compared to an average of 15 percent historically," he said.

Apart from access to finance, Geffen expected the two major market drivers in 2011 to be property operating costs and "convenience". Sapa

Read The latest issue of SA Property Monthly and Luxury lifestyle for sale in Parktown